Backgrounder: nine years of GST

Nine years of GST: what happened?

Before 2017, a truck crossing State borders paid a maze of taxes, and each tax was charged on the last one. GST replaced that with one national framework. Nine years on, the numbers show more businesses inside the tax net and a simpler rate structure after the 2025 reforms.

• Taxpayers grew from 66.5 lakh to 1.65 crore, a sign of formalisation.
• Collections reached about ₹4.37 lakh crore in April-May 2026.
• The 56th GST Council meeting approved the Next-Gen reforms, effective 22 September 2025.
• GST exemptions on insurance and essential medicines were part of the 2025 reforms.
• AI and data analytics now flag high-risk taxpayers while easing checks on compliant ones.

What are the key features of GST?

• Tax is on “supply” of goods or services, not on manufacture or sale separately.
• It is a destination-based consumption tax: revenue goes to the State where goods or services are consumed.
• Dual GST: CGST and SGST on intra-State supply; IGST on inter-State supply, generally twice the CGST/SGST rate.
• GSTN, a company owned 50% by the Centre and 50% by States, runs the digital backbone.

How has compliance become easier for small firms?

• From April 2019, the registration limit for goods suppliers rose from ₹20 lakh to ₹40 lakh; the composition limit from ₹75 lakh to ₹1.5 crore (except some special category States).
• QRMP scheme (2020): quarterly returns for turnover up to ₹5 crore; NIL returns even by SMS.
• Small e-commerce sellers of goods within a State are exempt from mandatory registration from October 2023.
• Low-risk applicants can get registration within three working days.

Which constitutional provisions govern GST?

• Article 246A(1): Parliament and, subject to clause (2), the Legislature of every State “have power to make laws with respect to goods and services tax imposed by the Union or by such State.”
• Article 269A(1): GST on inter-State supplies “shall be levied and collected by the Government of India” and apportioned between the Union and the States as Parliament provides by law on the GST Council’s recommendations.
• Article 279A: the President constitutes the Goods and Services Tax Council, chaired by the Union Finance Minister, with the Union Minister of State for Revenue or Finance and the Minister in charge of Finance or Taxation, or any other Minister nominated by each State Government, as members.

What do the GST numbers show?

Why does nine years of GST matter?

What are the challenges in nine years of GST?

• Alcoholic liquor and 5 other goods remain outside levy, so the “one tax” is not yet complete.
• The 2025 reforms had to correct inverted duty structures, which the backgrounder links to weaker domestic value addition.
• Past disputes needed relief through interest and penalty waivers for 2017-18 to 2019-20, showing early compliance pain.

What should be done next on nine years of GST?

• Use data analytics to target evasion without burdening honest firms.
• Keep the two-slab structure stable for business certainty.
• Decide on the 5 goods kept for future levy through the Council.

What can Prelims ask on nine years of GST?

• GST launched 1 July 2017; subsumed 17 taxes and 13 cesses.
• Destination-based consumption tax; CGST + SGST intra-State, IGST inter-State.
• GSTN: 50:50 Centre-State owned.
• GST 2.0 (22 September 2025): 5% and 18% main slabs; 40% on luxury and sin goods.
• Article 246A (power to legislate), 269A (IGST), 279A (GST Council).

How to write about nine years of GST in Mains

Practice question (15 marks, 250 words): “GST has strengthened cooperative federalism but the journey is incomplete.” Evaluate after nine years of GST.

• Intro: 1 July 2017; One Nation, One Tax.
• Gains: taxpayer base, collections, common market.
• Federal design: Articles 246A, 269A, 279A; GST Council.
• Gaps: items outside GST, disputes, inverted duties.
• Way forward and conclusion.